New partner signs on with South Texas nuclear project

Agreement part of plan for new units at nuclear power plant.

By Tracy Idell Hamilton

Published
3:41 pm CST, Monday, November 29, 2010

The expansion of the South Texas Project, slowed by controversy and uncertainty, took a step forward Monday.

Nuclear Innovation North America, which hopes to build two new reactors at the site near Bay City, awarded an engineering, procurement and construction contract to a new partnership between a Toshiba subsidiary and the Shaw Group Inc.

Shaw, a global engineering services company with nuclear construction expertise, also will invest $250 million in an alliance with Toshiba America Nuclear Energy for future nuclear work. Of that, $100 million will be available as a line of credit for NINA to assist with the development at STP.

NINA is a partnership between NRG Energy and Toshiba to develop new nuclear projects. Expanding STP has been the group's initial effort - and things have not gone smoothly.

NRG and CPS Energy used to be equal partners in the proposed expansion, until local controversy surrounding the cost of the project lead to lawsuits that left CPS with just a 7.6 percent stake.

The partners signed an initial EPC contract with Toshiba in February, before the partnership soured.

That left NINA and Toshiba spending millions of dollars every month while each looked for new investors, just as prospects for a much-vaunted American nuclear renaissance began to fizzle amid an economy gone sour and low natural gas prices.

In August, NRG said it would slash spending on the project by 95 percent while it waited to learn whether it would win the federal loan guarantees necessary to make the project viable.

Presuming it does and the project gets a notice to proceed, Shaw's credit line will convert to equity in NINA, according to a company's news release.

"The collaboration of Toshiba and Shaw is the ideal partnership for the expansion of the South Texas Project," said Steve Winn, president and CEO of NINA. "Each of these partners has industry-leading expertise in building nuclear power plants, and combined, they can deliver on-time and on-budget construction excellence."

A spokesman for NRG said the company still is looking for additional partners.

Doyle Beneby, CPS' CEO, said Shaw has a strong reputation and that having it on board "bodes well for the project coming to fruition."

The partnership doesn't affect CPS' stake.

The expansion, which would add 2,700 megawatts at STP, is on track for permitting in 2012, according to NINA, with the two new units scheduled to come online in 2016 and 2017, respectively.

CPS would receive about 200 megawatts for the roughly $386 million it invested.